LONDON (Reuters) - Investors pumped $11.9 billion into global equities in the past week and also put money into bank loans, likely viewing the rise in U.S. bond yields as reflecting a robustly growing economy, Bank of America Merrill Lynch said on Friday.

The bank’s data, which tracks fund flows from Wednesday to Wednesday, also showed some relatively small $400 million inflows into emerging stocks which have taken a hit from the U.S. Treasury selloff and the dollar’s rise but tend to benefit from an improving U.S. economy.

“The rise in 10-year U.S. yields from 2 percent to 3 percent over the past 18 months is a “good” rise in yields but if more than 3 percent (is considered) a “bad” rise... this should be revealed in coming weeks by further outflows from financials, emerging markets, credit as well as rising private client cash levels,” BAML told clients in a note.

A “good” yield rise would indicate faith in economic growth while a “bad” rise on the other hand could reflect the view that inflation is gaining the upper hand.

The bank said its private clients’ cash allocations currently stood at 9.8 percent of assets under management, a record low, testifying to their appetite for risk.

Within equities, U.S. funds took in $8.8 billion and Japanese stocks took in a modest $700 million but Europe posted its 10th straight week of losses, losing $800 million.

European shares have suffered as economic data has underwhelmed, indicating a growth slowdown even as U.S. companies have benefited from swinging tax cuts that boosted their bottom line at least in the first quarter.

Another indication of growth optimism was large inflows into pharmaceutical and technology stocks which took in $700 million and $500 million respectively, BAML said, adding “Investors show preference for growth over value”.

The data also showed $900 million inflow into bank loans, which BAML attributed to the fact that markets are now pricing in a roughly 40 percent probability of three more U.S. Federal Reserve rate rises this year, instead of two. Banks tend to benefit as interest rates rise.

Bond funds absorbed $3.4 billion. However, emerging debt recorded its fourth straight week of outflow, shedding $1.3 billion. Junk-rated bonds, also considered vulnerable to higher U.S. borrowing costs, also saw a second week of outflows.

BAML said, however, there were signs the Treasury yield rise could be approaching its end, noting $400 million in redemptions from financials stocks, bring three-week losses to $1.6 billion.

“This is important as the reversal in flows to financials funds preceded the peak in bond yields in both 2013 and 2017,” the bank added.

To view a graphic on Financials flows and bond yields, click: reut.rs/2KwALRF